Financial Performance of David Jones Limited 2011

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Financial Performance of David Jones Limited 2011

Financial performance for the year 2011

The total sales revenue of David Jones decreased from the previous year high of $2.053 billion to only $1.962 billion. Consequently, the gross margin also dipped from $817.729 million to $767.27 million. However, there was very little change in the net income which dipped from last year's high of $170.766 million to become $168.49 million. (Calculations are given in Appendix-I).

However, this decline in profits compared to the last year was not reflected on the balance sheet of David Jones. The total assets increased from the last year and became equal to $1.214 billion from last year's asset base of $1.195 billion. This increase in assets indicates that David Jones undertook certain capital investments. Still, it was not able to improve or sustain its last year sales level.

Likewise, the total equity of David Jones also changed. This was due to both slight changes in the equity base as well as due to increases in the retained earnings. Thereby, the total equity for the year became $785.48 million from last year's total equity of $744.238 million.

Just as there was very little change in the earnings for the current year, the EPS or earnings per share (basic) changed very little and decreased from last year's 34 cents to become only 33 cents for the year 2011. This is reflected by both changes in the equity which was raised by sharing new shares as well as due to the plummeting of the net income for the year 2011 (David Jones, 2011).

However, over a period of 4 years the highest sales were achieved in the year 2008 when total sales revenue was $2.098 billion. Then, the next year 2009 saw dipping of the sales revenue which improved in the year 2010. However, it again dipped in year 2011.

On the other hand, the net income only increased in the last 3 years regardless of the level of sales. However, the growth rate of income in the last 3 years was minimal and remained relatively at the level of current year 2011.

In addition, various ratios show exciting trends (Peterson and Fabozzi, 1999). The gross profit margin remained equal to 39% for the past 4 years. This shows that David Jones is doing effective cost management in addition to following better pricing strategies. It has been able to maintain its gross margin of about 40%.

The net profit margin for David Jones improved this year to become equal to 8.5%. This net profit margin has remained close to 7.5% for the past 3 years. This indicates that David Jones has not only been able to manage its costs but has even been able to improve its operations in terms of costs. Accordingly, David Jones has decreased its costs and other operating expenses to improve its net margin ratio.

The return on assets (ROA) of David Jones for the year 2011 was 13.8%. This return became reduced ...